Oil jumps 3 percent on OPEC plan details, U.S.-China trade hopes

NEW YORK (Reuters) - Oil prices rallied about 3 percent on Friday, boosted after OPEC detailed specifics on its production-cut activity to reduce world supply, and on signals of progress in resolving the U.S.-China trade war.

FILE PHOTO: An oil pump jack pumps oil in a field near Calgary, Alberta, Canada, July 21, 2014. REUTERS/Todd Korol

Futures were on track for a third straight week of gains, with Brent crude LCOc1 up $1.64 to $62.82 a barrel, or 2.7 percent, at 11:06 a.m. EST (1606) GMT. U.S. West Texas Intermediate (WTI) crude futures CLc1 were up $1.70 to $53.77 a barrel, or 3.3 percent.

The Organization of the Petroleum Exporting Countries on Friday issued a list of oil production cuts by its members and other major producers for six months starting on Jan. 1 to boost confidence in its oil supply reduction pact.

“It’s going to send a signal to the market that they’re serious,” said Phil Flynn, an analyst at Price Futures Group in Chicago. “I think they also want to point out that they’re probably going to be overcompliant with these numbers, especially from Saudi Arabia.”

The OPEC and non-OPEC ministerial panel also called on members and the organization’s allies, including Russia, to “redouble their efforts in the full and timely implementation” of the move.

The producer group and its allies agreed in December to return to output cuts, of 1.2 million barrels per day, to support oil prices and fight a glut amid rising supply, especially from the United States.

On Thursday, OPEC’s monthly report showed it had made a strong start in December before the pact went into effect, implementing the biggest month-on-month production drop in almost two years.

Markets were also buoyed by signs that Washington and Beijing might soon resolve their trade dispute.

A Bloomberg report on Friday showed China offered to go on a buying spree of U.S. goods, which investors saw as an attempt to draw closer to a trade deal with Washington.

However, some signs of weakening demand and surging U.S. output may keep prices in check.

The International Energy Agency said on Friday that U.S. oil production growth combined with a slowing global economy would put oil prices under pressure.

“By the middle of the year, U.S. crude output will probably be more than the capacity of either Saudi Arabia or Russia,” said the IEA, which kept its estimate of oil demand growth unchanged and close to 2018 levels at 1.4 million barrels per day.